Thursday, October 9, 2008

The Folly of the Growth Economy

Is it reasonable to expect our economy to have continual growth? What does economic growth really mean, anyway, and how is it tied to our well-being? Are there better models of well-being we should be using instead?

To begin to explore this, let's first look at the word "economy". It comes from the Greek word oikonomia, which means household management. Oikonomia is related to the word oikos, which we translate as "ecology" but which originally meant house or dwelling place. So oikonomia is, fundamentally, how we manage the place where we live, whether it be our home, our community, or the whole earth. In it's basic definition, it is not concerned with money at all. It is concerned with managing resources, however.

To illustrate this, I'm going to tell the tale of two different "oikonomias". And to keep it simple, these two "oikonomias" are going to be small farms. I'll call it:

The Parable of the Two Farms

The first farm is self-sufficient. It reinvests its resources back into the land by various methods of sound stewardship. Kitchen and yard waste, as well as animal manures, are composted and spread on the fields; crops are rotated; cover crops are used in the off-seasons to protect and amend the soils; beneficial insects are encouraged and symbiotic relationships form among plants and animals, enhancing the well-being of flora, fauna, and soils alike; diversity is a priority. The soil is seen as the ground from which all life springs, so it is treated with great reverence. Care is taken to preserve topsoil and good tilth. Sound land management protects against unnatural erosion and any unnecessary disturbance of the soil structure. Water resources are used judiciously.

This complex and diverse oikos provides everything needed for the survival and health of its inhabitants. And, in most years, enough of a surplus exists to allow for bartering with other places for more "exotic" goods.

The second farm is a little different. It espouses a strange philosophy which it calls oikonomic growth. The goal is not health or well-being. Instead, the goal is to be manically busy and focused on producing more and more stuff. This requires each year to be more productive than the last. They must be able to export more each year. Numbers have to go up, always.

They plant every tillable acre and harvest all of the mature timber. The next year, in order for their oikonomia to show growth, they need to increase their yields. So, they spread chemical fertilizers on the fields and pesticides to limit insect damage. They begin to clearcut their remaining stands of timber. They move their livestock into pens and feed them grain instead of grass, for the sake of efficiency. The soil begins to erode in the clearcuts, the fields demand more and more chemical inputs just to maintain their current yields. Concentrated animal wastes from the pens seep down into the water table and the well.

Eventually, the farm's assets are depleted. The topsoil is gone. The land is sterile. The water is poisoned. The inhabitants are sick. The farm is no longer able to produce.

So how did these two farms fare in managing their households? Which of the two had a sound oikonomia? Is it the one that showed growth for a number of years? Or could it be the one that never showed any growth?

Leaving the parable behind, I'll end with one more question. Can there be such a thing as a steady-state economy--one based on sustainability instead of robbing from the future?

Read what others are saying about the concept of the steady-state economy:

Wednesday, October 8, 2008

Meditations on Peace: One Heart's Lament

"Meditations on Peace" will be a recurring feature here.

Today it is the impassioned cry of an American soldier in Iraq. Please read his post here on iPeace and hold him in your heart today. Hold all those who are suffering the ravages of war in your heart.

Sunday, October 5, 2008

Forget the Global Economy

Let's step out of the mainstream for a minute and let go of some cherished notions. I'm about to propose a radical economic plan for the little guy. Hold onto your hats.

Here it is, in summary:

Live like your great-grandparents--or maybe better still, your great-great-grandparents.

But say no to indentured servitude. Some of our ancestors found their way here on a wish. It went by the name of indentured servitude and it robbed them of the very thing they most desired--their freedom. Today, we've wished our way into many things: houses, cars, cell phones, plasma t.v.'s. Those wishes are called mortgages, loans, lines of credit and service contracts. All forms of indentured servitude.

In a news article I read today, an economics professor referred to credit as nothing more than trust and faith. Trust and faith from the perspective of the issuer of the credit. Merely a wish from the perspective of the borrower.

It's a wish for future prosperity. Or a wish that things will continue to go as they have. Certainly it's a wish that things won't get worse.

In a lot of cases it's a wish to make yourself look bigger than you really are (see my post The Rise of Ego and Materialism). To live grandly in the moment, instead of sustainably over a lifetime. To look big now and maintain the wish that you will always be able to look big.

But we know you can't. As little children we're taught to recognize and respect limits, but as adults there seems to be absolutely no honoring of limits. The earth is finite. We can't all have more and more and more. That should be obvious.

If we lived like our ancestors and only bought what we could afford now, if we didn't borrow from the future and didn't take from the earth more than could easily be replenished, we could have economic security. We would recession- and depression- proof ourselves.

I know what you're thinking: our ancestors had credit, they had mortgages. Yes, you're right. They had credit at the general store. They had loans from the local bank. But they went to church with the store owner and the banker, they grew up together, they helped bring in each other's crops, often they were even related. In other words, they had trust and faith in each other. They depended on each other. These were real people having face-to-face interactions with each other on a daily basis.

Note that I didn't say they had transactions on a daily basis. There's a huge difference between interacting and transacting. Transacting is a fallen state, an abstraction--it's what we do now and what has gotten us into so much trouble.

Interacting is what we need to return to. It implies true human relationship, honoring each other and honoring the limits of the immediate situation. If there were still local banks where you personally knew the banker and he or she personally knew you and the bank's money came from and was invested in the immediate community, you wouldn't go in asking for a $700,000 mortgage. You'd be laughed out of town.

Instead, you'd ask for a loan that both you and your community could support. You'd build a house only big enough to meet your needs, without taking any more physical resources from the community than necessary.

My economic plan involves, as largely as possible, stepping out of the global economy and returning to a local one. The lesson from all of this recent madness is that we don't deal with abstraction very well. We can be responsible citizens on a small local scale, but it all falls apart when we increase the magnitude. In the global economy, we can't see the results of our actions anymore--they're spread so widely--so we lose accountability. When we participate in the global economy we inevitably cause suffering and damage.

We need to see the results of our actions. We need to live with the results of our actions. That's why our actions need to be on a local scale.

Friday, October 3, 2008

The Next Great Depression: When, Not If

Is anyone letting out a big sigh of relief now that the $700 billion bailout has passed?

I didn't think so.

And why should we be relieved? Has anything actually been accomplished? Debt has been shifted around but it's still there. The underlying issues that created the problem in the first place haven't been resolved. We're still operating from within the same totally dysfunctional paradigm.

The goal of the bailout, they're saying, is to free up credit. That is the last thing we need. To go back to business as usual? Come on.

I would much rather have our day of reckoning right now, for believe me it's coming. I would almost wish a depression on us, if it weren't for the magnitude of suffering that will inevitably result. A depression would be nothing more than a true reckoning of our situation. The fact is we are a debtor nation. The greatest debtor nation in the world. Americans now owe more on their mortgages than their houses are worth. We don't own so much as our own front doors. We have nothing. Why can't we face that now and begin to build true wealth?

I believe this bailout solves absolutely nothing. As individuals and families we need to prepare for the absolute worst. The dollar is going to fail. We are going to suffer from hyper-inflation. Savings, retirement accounts will be totally wiped out. Just forget that you even have them.

Focus on the real, tangible things. Your house, your land, your local community, your food supply, your water supply, how to stay warm, how to stay healthy, how to get along with people. The only capital that matters is our human and environmental capital. You know, the real stuff. Credit isn't real. Mortgages aren't real. Money isn't even real--we just use it symbolically to create the life we want.

But we can create good, meaningful, balanced lives without Wall Street.

That's the good thing that could potentially come out of all of this. Once people get over the shock of it all, and begin to let go of their idea that money ever meant anything in the first place, we might evolve into a whole new way of thinking and being.

We will return to living locally. Resources for the most part will remain within our communities and our communities will once more be strong vibrant places. We will no longer exploit the environment because it will be our environment--what we can see with our own two eyes. We will have to care because our well-being will depend on it. We will no longer have the luxury of robbing from future generations to finance our excesses. We will learn to live within our means and the means of this planet.

I know I sound like some doomsday extremist, but these are very extreme times. You have to know our economy can't continue growing indefinitely. This world has limits and we are already rubbing up against many of them. Sooner or later this system will fail. My prediction is that the time is nearly at hand. So, maybe the bailout buys us a little time. My advice--use that time very wisely.